Change. I think the time is right to reexamine this. I think it can enhance competition in the market. Make the market open to more players. I think you can reduce financial risk for a lot of financial institutions. Now we have cfp be rules in place and the market is maturing i think its time to reengage in this discussion. Let me say one other thing that is not actually about compensation but i think is connected. Another thing that needs to be picked up is to pick up a continued to work on standardizing Mortgage Servicing data. Some of you may recall back in 2010 we started uniform Mortgage Data Program to standardize data. Whether it was appraisals, loan arbitration, so forth. On that agenda was Mortgage Servicing data. We think about these disclosures and we think about the credit investor, where this is all going, its important to pick up that difficult challenge of standardizing Mortgage Servicing data so this would help the market in Mortgage Servicing be more transparent and easier to price. Faith thank you. We will touch base on some of this in the future. It might be interesting to hear your perspective if the time is right to address servicing compensation. Thank you and welcome to all of you. On august 4, the bureau published a modest 900 pages for your Summer Reading enjoyment. [laughter] it are mens the 2013 rule and it includes really quite a lot of clarification a lot of clarifications and cleanups. Many things that the Mortgage Services themselves came to the bureau and asked if we would correct. It also introduces some new requirements that were extremely important to consumer advocates. Things like successors in interest, transfers of servicing, borrowers and bankruptcy. It is effective in multiple portions of the rule in 12 months from publication in the federal register. If that happens this month, it would be august of 2017. The bankruptcy and successes interest portions will be affected in 18 months, which would be february 2018. In what can only be attributed to laurie goodmans sense of humor, i now have nine minutes to describe 900 pages. [laughter] buchalter seatbelts, here we go. Seatlbelts, here we go. Let me talk about some of the changes to servicers specifically at the bureau for the 2013 rules. These are clarifications that services can indeed enter into shortterm repayment plans without collecting a complete application documentation for consumers. More flexibility to stop collecting documents for a particular mitigation option when it is evident the borrower is not a candidate for the option. Clarification on how servicers select a reasonable deadline for borrowers to send in the rest of the documents for their loss mitigation application. Servicers and advocates interestingly enough say can we just you 30 days . We have to have all of these time frames that we have to try to calculate. We said sure, sort of. Yes, you can do 30 days but you have to take certain Consumer Protection time frames into consideration. Clarification on the use of acceleration to address nonmonetary defaults. The current rule doesnt really have a way to foreclose if there is a nonmonetary default. We clarified that. Generally services will no longer be required to send periodic statements on the loan. Are you going to continue to send periodic statements for years and years and years to a borrower it was annoyed by that practice . Obviously that is a no. Exemption from the 120 day foreclosure moratorium when a servicer is joining the action of either a senior or a junior lien holder. And finally something as simple as can we please put a low number on the required insurance form . These are not all of the servicer request changes, but they are sort of indicative of the kind of things that are simple, practical changes that we were able to make. However there are certain aspects of the rules that are more challenging and certainly more important in terms of adding new Consumer Protections. One of those, which probably engendered the most Public Comment in the rule was successors in interest. Im sure you all know this but to be clear it is someone who has acquired an ownership interest in a property but is not on the mortgage so they dont have a direct relationship with the servicer of the loan. They need information in order to protect the asset that they own. The rule basically has three parts for successors in interest. The first is a definition of who a successor is. We have created a definition that is basically consistent with the scope of the sale protections and barn st. Germain. You would also have a successor in interest protection in the servicing rule. That includes individuals that have acquired property by death of a joint tenant, death of a relative of the borrower, transfer of ownership to a spouse or children that would require death, legal divorce or separation, and then moving ownership into a trust where the borrower is the beneficiary of the trust. First is the definition. The next part of the rule basically says it outlines requirements for communicating with potential successors. I raise my hand, i say im a successor, what do you do . We had significant feedback from the Advocacy Community that servicers did not want to talk to successors. People were having a very difficult time communicating. The world outlines very specific requirements for potential successor contact. The servicer is required to promptly respond with a list of the type of documents that successor would need to prove they are the successor. For example, if im recently widowed and i am entitled to the property but not on the note, what would this document be . It would be as simple as a death certificate and a copy of the deed showing me as the owner of the property. One would think that is simple but it has been made apparently fairly complicated. Identifying those documents that are most common, providing them timely, and when you receive the documents from the potential successor reviewing them and responding with a decision timely are all key elements of the rule. Finally, the rule gives borrower status to confirmed successors, which means the borrower is entitled to all the protections under most of the servicing rules. They are entitled to get periodic statements. Escrow notices, insurance notices. They are entitled to loss mitigation protections under the rule. What does the rule not do . We have a lot of comment as i mentioned on this rule. Services were extreme the concerned about their liability and responsibility. It does not create a private right of action for unconfirmed successors. It does not require servicers to proactively go out looking for successors. When they find out someone has died. If a successor contact them, they have an obligation to work with the individual but they dont have to start doing lexisnexis searches to find them. It does not require servicers to offer any particular loss mitigation option to a successor in interest that has not assumed the loan. They dont have to. However they cannot condition and evaluation for loss mitigation on an assumption. Finally, it does not require servicers to provide periodic statements for any of the other notices required under the rule to more than one individual on the loan. If there still is a remaining borrower, even if you have one or two or three successors, you can continue communicating with your existing borrower. You dont have to send multiple notices to multiple people. Borrowers in bankruptcy. Basically certain borrowers in bankruptcy who intend to retain homeownership will be entitled to receive a monthly periodic statement, or a coupon book or whatever that has specifically been modified for the bankruptcy. They also must receive written Early Intervention notices, but they will continue to be exempt from live contact in Early Intervention. Finally the rule is provided sample notices that were extensively consumer tested, specifically for bankruptcy so that servicers dont have to go out and try to figure out how to create their own periodic statement notice. Servicing transfers. The rule says that a transferee servicer must step into the shoes of the transferer so that servicing transfers do not adversely impact consumers. It is really straightforward. The servicer has no say over whether their loan gets transferred and the transferee and the transferer have to figure it out to the consumer is not harmed in this transaction. That said, we do understand the art limited exceptions. Especially when loss mitigation is in play. It is very difficult for a transferee servicer, the new servicer to be able to respond timely because of the timing differential and getting all of this body of information from place to place. We have carved out a couple of specific exceptions. For example, if a loss mitigation application is received by a transfer or servicer within five days of the transfer date, that service or may not have the opportunity to review that and send the fiveday knowledge with notice and tell that borrower but they need to complete the application. The transferee will be required to do that but they will have days after the transfer to make that happened. They get extra time. Same thing is true in the case of a completed application. If a borrower has submitted an application within a short time prior to the transfer and the transfer servicer has not had the opportunity to review it and make a decision on the application, the transferee is required to do so. Same application. Dont ask me for more documents. Dont make me recreate everything. Look at my application and make a decision. They will have 30 days after the transfer to do that. They should have plenty of time in order to make those things happen. There are a couple of other nuances about appeals and some other things and there are also protections for the borrower because the time frames are being pushed out. Essentially that is the transfer of servicing rule. There are a number of changes in the loss mitigation space. Many of those changes were driven specifically by servicers themselves. They gave us more flexibility here and there. There are a couple i want to point out. The first one and probably the most important is the end of the one bite rule. In our current servicing rules all of the protections and loss mitigation only apply to a borrower one time during the entire life of the loan. A borrower has an adverse event and they get a loan modification for example, four years later some other terrible thing happens to them, they dont get any protections of the rule in the current rules. This will change on the new effective date. A borrower will be entitled to the protections of the rule more than once in the life of the loan if the borrower has submitted an application, a complete application, regardless of whether they did or did not get the mod. They reperform under that loan. Preperformance could be a permanent modification that brings the loan current. It could be a check from aunt mary. It doesnt matter. If the borrower manages to reinstate the loan, in the future if they have another adverse event, they can reapply. Also there is a new requirement for a written notice of complete application. A borrower submits the documents and there is no requirement to tell them they are done. Yes, we have your stuff. Under the new rule there will be that requirement. Finally the rule defines delinquency with respect to the servicing provisions of reg x and reg z. To begin a pmi. That doesnt mean the can of other definitions of delete quincy. He cant say you are not the liquid until after the 15 day grace period, or dont think my customers are deliquent until after 30 days. When you send the 36 day notice . When you send the 45 day notice . How do you cap 120 days of delinquency before you can take legal action. Those are all based of the new definitions in the rule which is basically the definition everyone is using anyway so it should not be too complicated. Lots of other things i can talk about. How did i do . Faith how long did it take you to either read or develop those pages . Ms. Maggiono we published in the role of november 2014. Faith michael, we are excited to hear from you and your new role. Let me just comment on three things. One is the loss mitigation standards issue now that the crisis era and programs and making housing and Homes Affordable programs for all expiring. I would like to really support an elaborate on some of eds comments. And close with floating an idea for a special servicer. With respect to loss mitigation standards, i have always been of the opinion that whoever owns or guarantees or mortgage should not determine what borrowers options are when they become troubled and distressed. I have always supported the notion of National Loss litigation standards. While congress is not opined on that, nor the administration directly, the Housing Finance reform works through johnson credo. We supported and the Senate BankingCommittee Majority that voted that bill out of Committee Really agreed there ought to be National Loss mitigation standards and included a provision for joint rulemaking between with the regulator would be, the successors to fannie and freddie and cfpb. At the same time back in 2013, in the annual report of the Financial Stability oversight council, it too calls for National Loss mitigation standards. As we contemplate the life after the report from treasury and fha, a little more detailed guidance by cfpb they came out in the last few days were certainly all looking forward to the release of the mba 1 mod report and continued engagement around the development of consensus standards. I keep really hoping for the adoption of National Standards so that all borrowers are on a level playing field. With respect to Compensation Reform, again going back to the fsoc report, we recognize the need to align incentives with the escalating costs of servicing nonperforming loans. And in that report and 2013 called for efforts to implement Compensation Structures that align incentives of Mortgage Servicing with those of borrowers and other participants in the mortgage market. We tried but unsuccessfully to actually it into johnson crepo and that joint rulemaking for loss mitigation standards. Also Compensation Reform. I continue to believe that its very important to move on that issue. Ed made the case that we are no longer in a gsc wanted to percent guarantee, but in a world of credit Risk Transfer where a interests with those who are taking credit risks with Mortgage Servicing, particularly of nonperforming loans becomes increasingly important. I just want to point out that in a recent securitization of j. P. Morgan chase earlier this year the securitization is the first that has gone to market under what is called the fdic safe harbor rule. The safe harbor rule is about if you meet the requirements of fdic that when into effect in 2010, the collateral would be protected that supports the bonds that are bought by private investors in the event the issuer goes bankrupt. In addition to that safe harbor, the fdic rules require an alignment of interests in the servicing issue. It requires service to compensation to include incentives for servicing and loss mitigation action. This deal that went to market that is out there really has adopted a Compensation Structure in a fee Service Structure similar to the options that ed spoke about and put up in the 2011 white paper that is really interesting and something we all should be both interested in an following. And set of that flat 25 basis point Servicing Fee io strip, it is a Compensation Structure in three parts. It establishes a base Servicing Fee for performing loans of 19 a month per loan. Incentives, there are monetary incentives to the servicer when that loan for those loans go into delinquency. 200 a loan per month for loans that are 30 to 119 days delinquent but not in foreclosure or reo. It escalates to 252 per loan per month if they are 120 days or more delinquent. And there is a series of onetime event driven fees, 1500 for a completed short sale to the servicer, 500 for a completed deed in lieu of foreclosure. 1000 for a completed reo sale. There are actually now examples of how a menu Service Compensation structure and a multitiered securitization with a number of taking mortgage credit risk out in the marketplace that we should be following. That is the second thing. Let me just close by mentioning way back when i joined treasury and we sell the escalation and knew about rising costs, we didnt know the cost of servicing performing loans or servicing performing loans have gone up significantly as well. A few of us a treasury, and this was purely at the staff level, never one of the chain of command, were thinking about whether or not as we saw the reputation risk, as we saw big banks beginning to kind of be hesitant at putting overlays on not wanting to take that next chance of originating loans with a higher probability likelihood of going into the lein whether or not those lenders might be interested in getting together and creating a nonprofit cooperatively owned special servicer that would take the responsibility of servicing these delinquent loans on a rulesbasedm best track this base where you have a situation in a Service World where that coop would not be having to earn private equity rates of return, but would really be able to apply best practices, loss mitigation standards in the best interest maximizing npv where maybe that would give banks more comfort in moving of that risk curve where you have credit qualified borrowers but with a higher chance of default. I am not going to go into any elaboration on that but i would like to put it out there. Faith thank you, michael. I think we have seen s